The City Editor's column

New Millennium, new lease of life for mutuals? Building societies, which spent the late 1990s under siege, scent a change of fortune. But they are not out of danger yet. The loss of four of their biggest names, including Halifax and Woolwich, to the stock market in a single traumatic year left mutuals reeling. Then the Nationwide survived a conversion vote by a whisker. Bradford & Bingley voted the other way, and is due to float in autumn.

Last month, the remaining 70-odd societies won a big victory by persuading the Treasury to raise the hurdles steeply against members seeking conversion. Then the Leek society defeated a hostile bid (having urged the bidders to 'bagger off').

Yesterday, windfall-chasers won a Pyrrhic victory when the Skipton and Chelsea societies agreed to allow a vote - but warned that it would be unlikely to change anything. Using their carpetbagger.com web-site, the bounty hunters put conversion resolutions to three societies. The Portman turned down the wording as invalid.

Because attempts to direct a board to convert can be ruled illegal, the 'baggers' simply asked the Skipton and Chelsea directors to 'consider' converting. The boards sidestepped a confrontation by allowing the resolutions - and urging members to support them. However, both have already considered - and rejected - converting and see no reason to change. That could turn the vote into an empty exercise. The baggers called it 'a cynical ploy to twist the meaning of the resolutions'. But Chelsea chief executive Michael Bage said: 'There is nothing cynical about what we are doing.'

Like Skipton's chief executive John Goodfellow, he argues strongly that mutuality delivers better savings rates and cheaper loans for all societies, Bage claims these benefits are worth £1bn a year. The latest research finds the eight cheapest lenders last year were all mutuals. Some societies' enthusiasm for sharing benefits with members is suspiciously recent, but still welcome. If they genuinely offer a better deal, they deserve a sympathetic hearing.

Some diehards go too far. Forcing new members to surrender any windfalls to charity may backfire, having already caused headaches at Nationwide. Opposing members' right to vote is pretty rich for a mutual body. Extremists argue that since boards represent unborn generations, they are entitled to ignore their living members.

There is nothing noble about the baggers, who simply want the money. Most mutuals have a good case to make against them. They should make it straightforwardly.